Oregon Administrative Rules
Chapter 150 - DEPARTMENT OF REVENUE
Division 314 - INCOME TAXATION GENERALLY GENERAL PROVISIONS
Section 150-314-0078 - Modified Factors for Carriers of Freight or Passengers: Special Rules - Airlines
Universal Citation: OR Admin Rules 150-314-0078
Current through Register Vol. 63, No. 9, September 1, 2024
(1) In General. Where an airline has income from sources both within and without this state, the amount of apportionable income from sources within this state is determined pursuant to ORS 314.610 to 314.665 except as modified by this rule.
(2) Apportionment of Apportionable Income. Apportionable income is apportioned to this state by use of the formula provided in ORS 314.650 as it applies to the tax year involved. For tax years beginning on or after July 1, 2005, ORS 314.650 provides for apportionment using only the sales factor.
(a) General Definitions. The following
definitions are applicable to the terms used in the apportionment factor
descriptions.
(A) "Value" of owned real and
tangible personal property means its original cost. (ORS
314.655 and OAR
150-314-0398)
(B) "Cost of aircraft
by type" means the average original cost or value of aircraft by type which are
ready for flight.
(C) "Original
cost" means the initial federal tax basis of the property plus the value of
capital improvements to such property, except that, for this purpose, it is
assumed that Safe Harbor Leases are not true leases and do not affect the
original initial federal tax basis of the property.
(D) "Average value" of property means the
amount determined by averaging the values at the beginning and ending of the
income year, but the department may require the averaging of monthly values
during the income year if such averaging is necessary to properly reflect the
average value of the airline's property. (ORS
314.655 and OAR
150-314-0406)
(E) The "value" of
rented real and tangible personal property means the product of eight (8) times
the net annual rental rate. (ORS
314.655 and OAR
150-314-0400)
(F) "Net annual
rental rate" means the annual rental rate paid by the taxpayer.
(G) "Property used during the income year"
includes property which is available for use in the taxpayer's trade or
business during the income year.
(H) "Aircraft ready for flight" means
aircraft owned or acquired through rental or lease (but not interchange) which
are in the possession of the taxpayer and are available for service on the
taxpayer routes.
(I) "Revenue
service" means the use of aircraft ready for flight for the production of
revenue.
(J) "Transportation sales"
means sales from transporting passengers, freight, and mail as well as liquor
sales, pet crate rentals, etc.
(K)
"Departures" for purposes of these regulations means all takeoffs, whether they
be regularly scheduled or charter flights, that occur during revenue
service.
(b) Property
Factor.
(A) Property valuation. Owned
aircraft must be valued at its original cost and rented aircraft must be valued
at eight (8) times the net annual rental rate in accordance with ORS
314.655 and OAR 150-314-0400.
The use of the taxpayer's owned or rented aircraft in an interchange program
with another air carrier does not constitute a rental of such aircraft by the
airline to the other participating airline. Such aircraft are accounted for in
the property factor of the owner. Parts and other expendables, including parts
for use in contract overhaul work, are valued at cost.
(B) The denominator and numerator of the
property factor. The denominator of the property factor is the average value of
all of the taxpayer's real and tangible personal property owned or rented and
used during the income year. The numerator of the property factor is the
average value of the tangible personal property owned or rented and used in
this state during the income year. In determining the numerator of the property
factor, all property except aircraft ready for flight are included in the
numerator of the property factor in accordance with ORS
314.655 and OAR 150-314-0396.
Aircraft ready for flight are included in the numerator of the property factor
in the ratio calculated as follows: Departures of aircraft from locations in
this state weighted as to the cost and value of aircraft by type compared to
total departures similarly weighted.
(c) Payroll Factor. The denominator of the
payroll factor is the total compensation paid everywhere by the taxpayer during
the income year (ORS 314.660 and OAR 150-314-0415).
The numerator of the payroll factor is the total amount paid in this state
during the income year by the taxpayer for compensation. With respect to
non-flight personnel, compensation paid to such employees is included in the
numerator as provided in ORS
314.660 and OAR 150-314-0417.
With respect to flight personnel (the air crew aboard an aircraft assisting in
the operations of the aircraft or the welfare of passengers while in the air),
compensation paid to such employees is included in the ratio that departures of
aircraft from locations in this state, weighted as to the cost and value of
aircraft by type, compared to total departures similarly weighted, multiplied
by the total flight personnel compensation.
(d) Sales (Transportation Sales) Factor. The
transportation sales derived from transactions and activities in the regular
course of the trade or business of the taxpayer and miscellaneous sales of
merchandise, etc., are included in the denominator of the sales factor (ORS
314.665 and OAR 150-314-0425).
Passive income items such as interest, rental income, dividends, etc., are not
included in either the numerator or the denominator nor are the proceeds or net
gains or losses from the sale of aircraft included. The numerator of the sales
factor is the total sales of the taxpayer in this state during the income year.
The total sales of the taxpayer in this state during the income year is the
result of the following calculation: The ratio of departures of aircraft in
this state weighted as to the cost and value of aircraft by type, as compared
to total departures similarly weighted, multiplied by the total transportation
revenue. The product of this calculation is to be added to any nonflight sales
directly attributable to this state.
[See PDF link below.]
(3) Records. The taxpayer must maintain the records necessary to arrive at departures by type of aircraft as used in these rules. Such records are to be subject to review by the state of Oregon or their agents.
Publications: Contact the Oregon Department of Revenue to learn how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and 183.355(1)(b).
To view tables referenced in rule text, click here to view rule.
Statutory/Other Authority: ORS 305.100 & 314.280
Statutes/Other Implemented: ORS 314.280
Disclaimer: These regulations may not be the most recent version. Oregon may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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